Case Study — How Trade Credit Insurance Unlocked Growth for an Electronics Manufacturer

• Industry: Electronics manufacturing (PCBs, sensors, IoT modules)
• Markets: Singapore, Malaysia, Thailand, Vietnam, Australia
• Customers: Distributors, e-tailers, OEMs (200+ active accounts)
• FY turnover (pre-TCI): S$160m
• Payment terms: Net 30–60 days, occasional 90 for strategic OEMs

1. Growth bottleneck from conservative credit limits

Sales teams were capped by internal credit ceilings; new and fast-growing distributors often hit limits during peak seasons.

2. Spike in overdue AR and impairments

Two mid-sized distributor insolvencies in the prior 18 months created S$1.4m in write-offs; DSO drifted from 52 → 59 days.

3. Patchy visibility on buyers outside core markets

Entering Vietnam and the Philippines outpaced the finance team’s ability to monitor counterparties.

Company V placed a whole-turnover TCI policy covering domestic and export receivables. Key components:

• Underwritten credit limits per buyer with ongoing monitoring and automatic alerts on downgrades.
• Collections support (amicable + legal) embedded in the policy.
• Claims indemnity up to 90% of approved losses (insolvency, protracted default).
• Online portal API integrated to ERP for real-time limit checks during order capture.
• Risk insights to guide market entry and set terms by segment.

Implementation (8 weeks):

• Portfolio data cleanse and buyer mapping (top 80% of exposure by value).
• Limit applications for 140 priority accounts; discretionary limits framework for the tail.
• ERP rule: block or route for approval if order > available insured limit.
• Playbooks for sales/credit exceptions (e.g., cash-against-documents, staged limit increases).
  
  

• Sales velocity: With insurer-backed increases, seasonal orders cleared instantly; fewer manual escalations.
• Market entry discipline: Limits and buyer ratings steered who to onboard first in Vietnam; two prospects were flagged early and put on safer terms.
• Collections muscle: Late-paying e-tailer (S$480k exposure) was moved into the insurer’s collections flow; 90% recovered without litigation.
• Board comfort for growth: The CFO justified expanding open terms to new channels as “risk-adjusted growth,” not “credit creep.”
  
  

• Channel concentration: Distributors hold inventory risk; TCI buffers counterparty failures.
• Cyclical demand & launches: Peaks require temporary credit headroom; insured limits scale.
• Cross-border exposure: Political/legal differences increase default complexity; policy harmonizes remedies.
  
  

• Coverage: 90% indemnity for insolvency & protracted default; excess of loss on >S$1m single-buyer exposures.
• Discretionary limits: Up to S$120k with internal scoring; escalated to underwriter above.
• Covenants: Buyer-notification triggers at 30/60 days past due; stop-shipment rules tied to coverage status.
• Data loop: Monthly buyer performance files refine limit requests and pricing.
  

• 1. Start with the 80/20: Apply for limits on the accounts that drive cash risk and growth; use Discretionary credit limits as a blanket cover for most of your clients with lower credit limit needs.
•  
• 2. Embed into order management: If the ERP/OMS doesn’t check coverage at order capture, you’ll leak risk.
•  
• 3. Use the insurer as a radar, not just a parachute: Their downgrades are early warnings—adjust terms fast.
•  
• 4. Measure and broadcast wins: Track claims recoveries and incremental sales approved by coverage to sustain buy-in.
  
  

• Push a top-50 buyer limit review to unlock peak-season orders.
•  
• Turn on past-due alerts and link to automatic credit holds.
•  
• Run a new-market prospect screen using insurer data before onboarding.
•  
• Set a credit-for-growth playbook: target accounts, limit asks, and stepped terms (30→45→60 days) tied to payment behavior.